It's all part of a radical plan to turnaround under-performing gold equities. While the price of gold has risen more than 200 per cent since 2006, major gold stocks were flat over the same time, according to Nick Holland, CEO of South African miner, Gold Fields Limited.

Endeavour's Mr Woodyer, has told The Australian: “We can't pay a dividend while we're borrowing money, but when we do, we will pay it in gold. People will love it. They could take it in cash if they wanted to, but we produce gold and that should be our currency.”

Rebuilding shattered confidence

He added that his plan was part of a crusade to rebuild investor confidence in the gold sector. Reporting of production cash costs that excluded significant charges, such as royalties and depreciation, and a history of over-promising and under-delivering had hurt investor attitudes towards the sector, he said.

Several gold miners around the world have started reporting their full production costs per ounce of gold, as well as the cash costs of production in an effort to make their reporting more transparent. Australian listed gold miners, Evolution Mining (ASX: EVN) and Kingsgate Consolidated (ASX: KCN) now both report total cash costs which include royalties as well as other costs, as does Gold Fields and North American gold giants Barrick and Newmont.

Getting back to Endeavour and its gold dividend plan, while the logistics of paying all shareholders in gold boggles the mind, Mr Woodyer suggested that with a large number of significant shareholders on Endeavour's register, distribution of the gold would be relatively simple.

For companies like Australia's largest list gold miner, Newcrest Mining (ASX: NCM), with potentially thousands of minor shareholders, a similar plan could be a nightmare.

Foolish takeaway

Mr Woodyer may only be jesting, but the idea will have gold bugs excited. Paying dividends in physical gold raises many more issues than simply paying them out in cash or by cheque.

Still, the idea of picking up a couple of gold bars at the AGM has a certain appeal. If it catches on, investors in wineries might be first in the queue, but there are only so many of Ansell's (ASX: ANN) rubber gloves one shareholder could want!

Attention: We're not sure that paying dividends in gold will catch on, but in any form, dividends have historically been a hugely important component of investment returns.

Foolish, dividend-loving investors and BusinessDay readers alike who are looking for Australian investing ideas can click here to request a Motley Fool free report entitled Secure Your Future with 3 Rock-Solid Dividend Stocks.

Mike King is a Motley Fool writer/analyst. He owns shares in Kingsgate. You can follow The Motley Fool on Twitter @TheMotleyFoolAu. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.